May 22, 2003

PRESS RELEASE

FORMER ATTORNEY SENTENCED FOR TAX OFFENSES

Boston, MA... A former Boston attorney was sentenced today in federal court to a term of imprisonment for subscribing to false tax returns, failure to file a timely tax return and corruptly endeavoring to obstruct and impede the administration of the tax laws.

United States Attorney Michael J. Sullivan; Joseph A. Galasso, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation; and Michael Delgado, Special Agent in Charge of the U.S. Treasury Inspector General for Tax Administration, announced that JOHN R. BERMAN, age 69, of Waltham, Massachusetts, was sentenced today by U.S. District Judge Douglas P. Woodlock to serve 1 year and 3 months' incarceration, to be followed by 1 year of supervised release. BERMAN was also ordered to pay a fine of $4,000.

On February 26, 2003 BERMAN pleaded guilty to willfully subscribing to false individual income tax returns for the years 1994 to 1997; willfully failing to file an income tax return for the year 1998 on or before the date set by law; and corruptly endeavoring during the period 1992 to January, 1999, to obstruct and impede the due administration of the tax laws.

At the earlier plea hearing, a federal prosecutor told the Court that, had the case proceeded to trial, the government would have proven that BERMAN was an attorney licensed to practice in Massachusetts, whose practice focused on tax matters, including representing clients before the IRS, estate planning and the administration of estates. In addition to his law practice, BERMAN conducted an investment and lending business in which he arranged for clients who were willing to lend money, to be matched with persons who wanted to borrow money. These were usually short term, high interest loans, secured by real estate, in which BERMAN typically would create a trust, with himself as trustee; fund the trust with money from the lending client and then lend the money to the borrower, secured by a mortgage on real estate. BERMAN would typically receive a brokerage fee from the borrower for arranging for the loan and his law firm would receive legal fees in connection with the loan closing.

BERMAN subscribed income tax returns for the years 1994 to 1997, which failed to include monies belonging to various clients which BERMAN had used, without his client's authorization or knowledge, to support his investment and lending business. BERMAN willfully failed to file his 1998 tax return on or before the date set by law, even though he had gross income in excess of the filing threshold, including monies which were the result of using clients' funds, without the clients' knowledge or consent.

During the period 1992 to January, 1999, BERMAN corruptly endeavored to obstruct and impede the due administration of the tax laws by failing to file clients' tax returns with the IRS in a timely manner; seeking extensions of time from the IRS to file clients' tax returns, without the clients' knowledge and on the basis of false information; failing to forward to the IRS client funds which had been provided to him for estimated tax payments; filing tax returns for clients with the IRS which falsely claimed estimated payments had been made, when they had not; and accepting funds from clients to fund payments to the IRS and then using the funds for other business purposes.

Judge Woodlock ordered BERMAN to surrender to begin serving his sentence on June 16, 2003. BERMAN was disbarred from the practice of law in Massachusetts on December 31, 1999.

The case was investigated by the U.S. Internal Revenue Service, Criminal Investigation and the U.S. Treasury Inspector General for Tax Administration. It was prosecuted by Assistant U.S. Attorney Peter A. Mullin in Sullivan's Economic Crimes Unit.

Press Contact: Samantha Martin, (617) 748-3139